Kraft Heinz profits decline 0.3% in first quarter results

USA – Kraft Heinz profits declined 0.3% to US$893 million in its first quarter ended March results which show net sales declined 0.3% to US$6.3 billion while organic net sales decreased 1.5% compared to the same period a year ago.

The company said the financial results reflected higher input costs, lower net sales in the United States, and investments to enhance capabilities, as well as lower taxes versus the prior year period.

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The period witnessed a 1.2% benefit from currency, 1% increase in pricing driven by price increases in the United States and Rest of World markets while lower shipments in these markets led to a 2.5% decline in volume/mix.

This was offset solid retail growth in Canada and EMEA as well as foodservice gains in the United States and EMEA.

Net income increased to US$1bn, indicating benefits from the U.S. Tax Reform.

EBITDA decreased 2.6% versus the year-ago period to US$1.8 billion favoured by 0.9%-point impact from currency offset by higher input costs, lower volume/mix and investments in strategic initiatives.

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US net sales were US$4.4 billion, down 3.3% weighed down by higher pricing while volume/mix decreased 4.1% as solid gains in foodservice and a favorable shift in Easter-related sales was more than offset by lower shipments of nuts, cold cuts, frozen potatoes and parts of the cheese business.

In Canada, net sales were US$484 million, up 9.8% and in the period higher pricing in several categories was offset by lower pricing in cheese.

Volume/mix increased 5.0% reflecting earlier implementation of go-to-market agreements with key retailers that primarily benefited cheese and coffee sales, according to the company report.

Increased promotional activity in infant nutrition, primarily in Italy boosted EMEA’s net sales which stood at US$685 million, up 14.7% compared to the previous year

Volume/mix increased 2.8%, reflecting a strong soup season in the UK and growth in condiments and sauces, as well as gains in foodservice.

“Our first-quarter results were consistent with, if not slightly better than, the expectations we expressed in February,” said Kraft Heinz CEO Bernardo Hees.

“The initial successes we’re seeing in the marketplace, together with the strong investments we’re making in marketing, new product innovation, and capability-building, give us increased confidence in delivering the top- and bottom-line growth we expect in 2018.”

 

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